Search found 2515 matches

by alex_686
Fri Nov 17, 2017 3:27 pm
Forum: Investing - Theory, News & General
Topic: Monte Carlo Analysis VS Historical Rolling Periods
Replies: 8
Views: 382

Re: Monte Carlo Analysis VS Historical Rolling Periods

There are 2 problems with using historical rolling periods. The first is that there are secular changes in how the market works. Think of the market structures that drive the market - these change slowly over time. The economy, companies, and investors of the 1950s are not those of the 1980s or of t...
by alex_686
Fri Nov 17, 2017 3:17 pm
Forum: Investing - Help with Personal Investments
Topic: Current precarious equity environment for a retiree
Replies: 18
Views: 1051

Re: Current precarious equity environment for a retiree

Dachshund, I am not exactly against market trimming exactly. If the market's expectations of risk and return bounce around, but one's risk tolerance is static, one should update their AA to match expectations. The problem that we currently face is that the market is expecting a long period of low re...
by alex_686
Wed Nov 15, 2017 4:48 pm
Forum: Investing - Theory, News & General
Topic: Luxury Index Funds
Replies: 12
Views: 1543

Re: Luxury Index Funds

Here is a question. How good - in the technical sense - are creating the best AA for yourself? How discipline are you in rebalancing your portfolio? I am very good at both so I DIY. Most people are not. For them "Luxury" - and I don't consider them "Luxury" - are well worth it.
by alex_686
Wed Nov 15, 2017 12:03 pm
Forum: Personal Consumer Issues
Topic: Favorite Holiday Recipes
Replies: 35
Views: 2363

Re: Favorite Holiday Recipes

This is our new holiday recipe favorite, Mary Berry's Apple & Almond Cake Recipe. It is from The Great American Baking Show which is the US version of the British Baking show. It makes a nice cake and uses almond flour instead of regular flour. http://abc.go.com/shows/the-great-american-baking-show/...
by alex_686
Wed Nov 15, 2017 10:46 am
Forum: Investing - Theory, News & General
Topic: Dangers of a Broker
Replies: 7
Views: 1034

Re: Dangers of a Broker

In the case of DeGiro, they are able to lend out your ETFs up to 30% though so if both their clients and they went bankrupt you might lose up to 30% with a "normal" account in the absolute worst case. I believe this lending out is how they make most of their money, apart from the cheap but high vol...
by alex_686
Wed Nov 15, 2017 9:39 am
Forum: Investing - Theory, News & General
Topic: Improving returns on total bond market without changing the risk profile
Replies: 8
Views: 1095

Re: Improving returns on total bond market without changing the risk profile

Isn't the fundamental theory that you can't get more reward without taking more risk? That if you somehow found an inefficiency and effectively beat the market by getting more reward for the same risk, then the market is pretty efficient and will tend to self-correct and remove that "free money" an...
by alex_686
Tue Nov 14, 2017 10:18 pm
Forum: Investing - Theory, News & General
Topic: Improving returns on total bond market without changing the risk profile
Replies: 8
Views: 1095

Re: Improving returns on total bond market without changing the risk profile

What analysi? The author did not provided much. He found a particular period where a particular weighting outperformed. Was this due to fundamental casual factors or just the luck of the draw? He references the fact that there are many buckets. I don't know why this is important. I don't see the ter...
by alex_686
Sat Nov 11, 2017 10:35 pm
Forum: Investing - Help with Personal Investments
Topic: AA: Should I List Junk Bond Fund Under Stocks or Bonds?
Replies: 12
Views: 710

Re: AA: Should I List Junk Bond Fund Under Stocks or Bonds?

Bond. Historically it has acted more like a bond, and I would guess in today's interest rate environments this would be doubly so. Where are you getting your info that it acts more like a stock? I would break it out into its own catagoey before I would included it in equity. FYI I stock preferred st...
by alex_686
Fri Nov 10, 2017 5:38 pm
Forum: Investing - Help with Personal Investments
Topic: Individual Stocks
Replies: 22
Views: 1383

Re: Individual Stocks

Thanks for chiming in. How many stocks do you need for a good sample? My guess would be 50. The election polls usually have samples of 1,200 likely voters or something like that. I know of the techniques to pick the 20 or so stocks to replicate the S&P 500. Election polls assume that the sample siz...
by alex_686
Fri Nov 10, 2017 4:47 pm
Forum: Investing - Theory, News & General
Topic: How much does diligent rebalancing add to a portfolio?
Replies: 35
Views: 2242

Re: How much does diligent rebalancing add to a portfolio?

There is another factor that we have not talked about there, how we rebalance and the type of market we are in. There are concave and convex rebalancing options out there. Each of these rebalances risk but in different ways. Concave, or having a fixed asset allocation, does best in a osculating mark...
by alex_686
Fri Nov 10, 2017 4:00 pm
Forum: Investing - Help with Personal Investments
Topic: Individual Stocks
Replies: 22
Views: 1383

Re: Individual Stocks

Right now, I have 18 stocks in my brokerage IRA. Over time, it has varied from 15-20 stocks. The exception was when I was starting out, I had one! But I branched out over time and 15-20 seems to be optimal for a small investor. Plus most of my stocks are well-known names that you will recognize. Pr...
by alex_686
Fri Nov 10, 2017 2:15 pm
Forum: Investing - Help with Personal Investments
Topic: Individual Stocks
Replies: 22
Views: 1383

Re: Individual Stocks

I would not say that Bogleheads are against owning individual stocks. I would say that the Boglehead position is that the owning the market via broad indexes is a very efficient, in terms of risk adjusted risk. The market portfolio is the neutral, default portfolio one should start with. One can inv...
by alex_686
Fri Nov 10, 2017 12:03 pm
Forum: Investing - Help with Personal Investments
Topic: Stable Value vs Total Bond Market Funds
Replies: 9
Views: 696

Re: Stable Value vs Total Bond Market Funds

I guess I am confused on how the stable value fund operates. The only guaranteed minimum gross interest rate information I can find says it won't go below 0.00%. Otherwise the last quarter listed returned 3.70% as of 6/30/2017. The amounts I listed for the total bond index are from the packet they ...
by alex_686
Fri Nov 10, 2017 11:29 am
Forum: Investing - Help with Personal Investments
Topic: Stable Value vs Total Bond Market Funds
Replies: 9
Views: 696

Re: Stable Value vs Total Bond Market Funds

First, a stable fund is fine. It is a different beast than a total market fund but it works just fine in rounding out one's bond asset allocation. That being said, every stable fund is different. To yours, you need to compare apples to apples. Ignore the historic return of Total Bond Market. What yo...
by alex_686
Wed Nov 08, 2017 4:36 pm
Forum: Investing - Help with Personal Investments
Topic: Bond Fund question - active vs. managed (VBMFX vs. PICYX)
Replies: 16
Views: 783

Re: Bond Fund question - active vs. managed (VBMFX vs. PICYX)

A couple of points. I think that active management can bring in benefits. Rarely are those benefits worth costs. Figuring out those benefits is hard. The checklist below is next to worthless. You are dealing with two different funds. One is a total market fund - government and corporate, short and l...
by alex_686
Mon Nov 06, 2017 1:56 pm
Forum: Investing - Theory, News & General
Topic: Who owns Vanguard? Schwab and Fidelity!
Replies: 27
Views: 3512

Re: Who owns Vanguard? Schwab and Fidelity!

Here's another pair of hard numbers which might help approximate the actual difference in magnitude: SWPPX (Schwab® S&P 500 Index) is 29 billion ( http://www.morningstar.com/funds/XNAS/SWPPX/quote.html ) VFINX (Vanguard 500 Index Investor) is 367 billion ( https://www.morningstar.com/funds/XNAS/VFI...
by alex_686
Sun Nov 05, 2017 10:35 am
Forum: Investing - Theory, News & General
Topic: Who owns Vanguard? Schwab and Fidelity!
Replies: 27
Views: 3512

Re: Who owns Vanguard? Schwab and Fidelity!

OK, I understand that Schwab and Fidelity may not own huge parts of Vanguard on their own account. But they still are formally the owners of the shares. Do they allow their clients to vote Vanguard proxies? Or do they decide how to vote based on their own interests? My main concern is whether there...
by alex_686
Fri Nov 03, 2017 8:49 pm
Forum: Investing - Theory, News & General
Topic: Dividends better than buybacks in retirement accounts
Replies: 32
Views: 2310

Re: Dividends better than buybacks in retirement accounts

A companies market-cap doesn't necessarily change when a buyback occurs, i.e. a $100 Billion market-cap company made up of 100 shares is still worth $100 Billion if it repurchases 10 shares, but the remaining 90 shares went from being worth $1 Billion each to now being worth $1.11 Billion each. It ...
by alex_686
Fri Nov 03, 2017 7:51 pm
Forum: Investing - Theory, News & General
Topic: Dividends better than buybacks in retirement accounts
Replies: 32
Views: 2310

Re: Dividends better than buybacks in retirement accounts

Is there any evidence that index funds sell a portion of companies based on their share buybacks? I've never seen That in a prospectus ever. It would not be in the prospectus.The fund follows the index so how they handle buybacks would be under the index providers methodology white paper. Some inde...
by alex_686
Fri Nov 03, 2017 3:29 pm
Forum: Investing - Theory, News & General
Topic: Dividends better than buybacks in retirement accounts
Replies: 32
Views: 2310

Re: Dividends better than buybacks in retirement accounts

All that buyback money went poof for investors. Not for index investors. They would have sold shares back to Dell in proportion to the stock buy back, resulting in identical Free Cash Flow to Equity (FCFE). At least in theory - executing in practice is a bit more difficult with information issues -...
by alex_686
Fri Nov 03, 2017 10:20 am
Forum: Investing - Help with Personal Investments
Topic: How consistent will VNQ dividend be?
Replies: 65
Views: 3505

Re: How consistent will VNQ dividend be?

Just one note, for VNQ at least I have generally noticed a larger Q4 dividend than normal (and often, but not always, a lower Q1). I assume this is because, since they have to pay out 90% of profits, maybe they are conservative early on and then need to bump up the dividend at the end of the year w...
by alex_686
Thu Nov 02, 2017 8:34 pm
Forum: Investing - Help with Personal Investments
Topic: How consistent will VNQ dividend be?
Replies: 65
Views: 3505

Re: How consistent will VNQ dividend be?

Dividends are stabilizing. I could see someone in retirement or close to retirement wanting high dividends. How stable is it when the board of directors does not authorize the payment of such dividends? The board of directors fiduciary duty is to that of the shareholders in keeping the company solv...
by alex_686
Thu Nov 02, 2017 1:07 pm
Forum: Investing - Help with Personal Investments
Topic: Retirees Move to Index Funds?
Replies: 9
Views: 1018

Re: Retirees Move to Index Funds?

I will make a very modest case Morgan Stanley by asking what value they give you? I think that Vanguard or index funds are great. It is based on solid theory, well executed, and historically robust. If you have a simply portfolio that you can execute yourself it is the way to go. Portfolio's can be ...
by alex_686
Wed Nov 01, 2017 3:24 pm
Forum: Investing - Help with Personal Investments
Topic: what % return do you use?
Replies: 62
Views: 4060

Re: what % return do you use?

How many that have less than 10 years till FIRE are using something lower than 7% and if so, what? Especially if you consider the recent bull run we've been on, it seems almost impossible to expect and average of 7% over the next 10 years. I don't believe in historical approaches. I doubt I can mod...
by alex_686
Wed Nov 01, 2017 1:45 pm
Forum: Investing - Theory, News & General
Topic: Matching bond duration to....?
Replies: 17
Views: 1075

Re: Matching bond duration to....?

In general I would think the preferred holding period of a bond fund is two times its duration. That way, if an interest rate increase occurs in the mid-point of the holding period then the investor is protected. This is still a rule of thumb, rather than an iron solid guarantee. Interest rates can...
by alex_686
Wed Nov 01, 2017 12:37 pm
Forum: Investing - Theory, News & General
Topic: Matching bond duration to....?
Replies: 17
Views: 1075

Re: Matching bond duration to....?

To extend a bit more what you want to do is a bit of active management, a bit of liability matching. Figure out your required return and risk tolerance. Figure out your cash flow needs - what you will need in 1, 5, and 10+ years and assign bond funds accordingly. Each year repeat the exercise. You m...
by alex_686
Wed Nov 01, 2017 12:24 pm
Forum: Investing - Theory, News & General
Topic: Matching bond duration to....?
Replies: 17
Views: 1075

Re: Matching bond duration to....?

I get the rule of thumb. My point is then what? When you break even 15 years later sell it and buy TBM? The logic is this: Duration measures the interest rate risk of a fund. If a fund's duration is 15 then a 1% increase in rates will result in a 15% decrease in the fund's price. If you hold the fu...
by alex_686
Wed Nov 01, 2017 11:51 am
Forum: Investing - Theory, News & General
Topic: How to learn about financial statement analysis?
Replies: 31
Views: 2967

Re: How to learn about financial statement analysis?

Take a formal class in basic accounting at a university, perhaps in the evening. It helps to have someone teaching you in person. Imagine trying to learn to read on your own from watching videos or trying to learn math by reading a book and learning accounting on your own would be equally difficult...
by alex_686
Wed Nov 01, 2017 11:23 am
Forum: Investing - Theory, News & General
Topic: Matching bond duration to....?
Replies: 17
Views: 1075

Re: Matching bond duration to....?

What I don't get is, say you invest in BLV, it goes up, then down, all over the place for 15 years....then in year 17 (three years from retirement) the fund is up. At this point, why would you stay in the fund? Why do bond funds go down? It is because interest rates have gone up. As a rule of thumb...
by alex_686
Tue Oct 31, 2017 7:07 pm
Forum: Investing - Theory, News & General
Topic: Interest Rates Over Seven Centuries, 1273-2017
Replies: 13
Views: 2027

Re: Interest Rates Over Seven Centuries, 1273-2017

I would like to point out that there have been secular changes during this time period. At the start governments really were not governments - they were more like the private enterprise of a family. Most loans were made to the head of state, not to a country. Most people did not use money as we kno...
by alex_686
Tue Oct 31, 2017 2:26 pm
Forum: Investing - Theory, News & General
Topic: Interest Rates Over Seven Centuries, 1273-2017
Replies: 13
Views: 2027

Re: Interest Rates Over Seven Centuries, 1273-2017

Investors, though, are all human and humanity hasn't changed. People are subject to the same emotional and behavioral biases and shortcomings that they always have been - technology and modernity doesn't change that. Good point. But I believe this applies more so to stock investing, where investors...
by alex_686
Mon Oct 30, 2017 4:56 pm
Forum: Investing - Theory, News & General
Topic: Vanguard GNMA Fund Versus Total Bond Market Index Fund
Replies: 19
Views: 2682

Re: Vanguard GNMA Fund Versus Total Bond Market Index Fund

GNMA funds have negative convexity. This makes them higher risk to investors leading to the higher yields. You can learn more here: https://www.vanguard.com/pdf/icrddc.pdf?2210045720 I am going to quibble a bit with this. First, the negative convexity does not mean higher risk - it means a differen...
by alex_686
Mon Oct 30, 2017 11:31 am
Forum: Investing - Help with Personal Investments
Topic: How do I invest in a vanguard trust
Replies: 10
Views: 664

Re: How do I invest in a vanguard trust

You find a company that has a 401k plan that uses that Vanguard fund. Some large companies might have a multi-tens-billions plan that can invest in such a thing. Yes I do invest in it in my 401k :happy Now how to invest in it in my taxable account? Not going to happen. The SEC regulates mutual fund...
by alex_686
Mon Oct 30, 2017 10:41 am
Forum: Investing - Theory, News & General
Topic: How to learn about financial statement analysis?
Replies: 31
Views: 2967

Re: How to learn about financial statement analysis?

ah ok. I am still a bit puzzled about this because on the one hand people who here who know a lot about financial statements say they don't seem to help in investing; on the other the quants by just picking stocks with low PE ratios (or price to cash flow) - and with ROE+operating margins above som...
by alex_686
Sun Oct 29, 2017 8:17 pm
Forum: Investing - Theory, News & General
Topic: Wrong amount of BABA in VT? [Vanguard Total World Stock]
Replies: 9
Views: 936

Re: Wrong amount of BABA in VT? [Vanguard Total World Stock]

This is a free float issue. Most of GE stock floats. BABA has 2 issues IIRC. The first is that a large chunk of the stock is held by founders and other insiders. The second is that index underweights China due to poor integration with the world stock market and capital controls. It does not matter i...
by alex_686
Fri Oct 27, 2017 12:58 pm
Forum: Investing - Theory, News & General
Topic: How are various investments impacted by inflation?
Replies: 21
Views: 1545

Re: How sensitive are various instruments to inflation?

Real estate also usually has a positive expected real return. +1 Property values go up. Rents go up. :D All investments I know - with the exception of cash - have positive expected real return. Otherwise why invest in them? That being said, investment in real assets - be it real estate or stocks - ...
by alex_686
Fri Oct 27, 2017 12:55 pm
Forum: Investing - Help with Personal Investments
Topic: A/A re balance
Replies: 4
Views: 278

Re: A/A re balance

The rational choice is to do it all at once. You have determined your optimal AA so execute your AA.

Doing it slowly - or Dollar Cost Averaging as they say - is to address behavioral and emotional issues. Fear of regret, that sort of thing. This does not seem to be a factor here.
by alex_686
Fri Oct 27, 2017 11:16 am
Forum: Investing - Help with Personal Investments
Topic: Maintaining AA with uneven incoming cash flow
Replies: 11
Views: 892

Re: Maintaining AA with uneven incoming cash flow

I wanted transaction free funds/etfs at Fidelity, so I decided to stick with LQD/SLQD split for the intermediate Corp. LQD has a 8.3 year duration, which was a little high, so I added SLQD (duration 2.28 years) to bring the average duration closer to 5 years. I read that this was an appropriate str...
by alex_686
Thu Oct 26, 2017 4:39 pm
Forum: Investing - Theory, News & General
Topic: 4 Bond-Fund Basics Worth Knowing
Replies: 6
Views: 1186

Re: 4 Bond-Fund Basics Worth Knowing

I didn't thoroughly read the article, but part of the message seems to be that bond fund managers, while ostensibly attempting to match the risk/return of the aggregate index, can easily beat the index by simply taking on more risk (i.e. buying a disproportionate percentage of lower rated bonds). I...
by alex_686
Thu Oct 26, 2017 4:32 pm
Forum: Investing - Theory, News & General
Topic: Career advice: Ok to work as a Commission-Based FA?
Replies: 18
Views: 1254

Re: Career advice: Ok to work as a Commission-Based FA?

I too have sometimes felt like punching people on facebook. If I were you, I'd use this guy to get your license and then go off on your own as a flat-fee CFP. I'm sure you could help a lot of people. Maybe. I have worked professionally on creating models for FA development and profitability. This w...
by alex_686
Thu Oct 26, 2017 7:24 am
Forum: Investing - Theory, News & General
Topic: How are various investments impacted by inflation?
Replies: 21
Views: 1545

Re: How sensitive are various instruments to inflation?

I am not sure you are asking the right question. All of the above investments already have expected inflation priced in. For example, both nominal and TIPS government bonds should have the same expected yield. I think you want to focus on unexpected changes to inflaton. That is what is implied when ...
by alex_686
Wed Oct 25, 2017 1:53 pm
Forum: Investing - Help with Personal Investments
Topic: Concern re bond funds and current interest rate trend
Replies: 22
Views: 1541

Re: Concern re bond funds and current interest rate trend

I am not sure what your question is. The current interest rate trend is already priced into the market, so no reason why you should change your bond AA because of that. Is the bond market offering historically low returns for the amount of risk you are being ask to take. O.K., I would agree with tha...
by alex_686
Wed Oct 25, 2017 1:38 pm
Forum: Investing - Theory, News & General
Topic: Question of Correlation
Replies: 7
Views: 400

Re: Question of Correlation

I was just trying to understand why when the assets moved in the same direction they had negative correlations as opposed to when they moved in opposite directions which is what I would have thought. Did they move in the same direction? Zoom in on 2008. The real estate bubble burst, hitting the eco...
by alex_686
Wed Oct 25, 2017 1:20 pm
Forum: Investing - Theory, News & General
Topic: Treating an inherited spousal IRA as your own
Replies: 6
Views: 703

Re: Treating an inherited spousal IRA as your own

If the account were retitled then it would be option #2 - "Joan Jones, IRA". There is no legal reason why it can not be done this way. Most brokers will insist on opening a new account. There is a transition from one type of account to another and opening a new account is the cleanest way to handle ...
by alex_686
Wed Oct 25, 2017 1:12 pm
Forum: Investing - Theory, News & General
Topic: Question of Correlation
Replies: 7
Views: 400

Re: Question of Correlation

The fact that in a down market there is no real correlation between stocks and bonds makes sense, however in the up market why is the correlation negative if both assets have positive returns. Is the answer because the stocks are so significantly outperforming bonds? First, are you using total retu...
by alex_686
Wed Oct 25, 2017 11:04 am
Forum: Investing - Theory, News & General
Topic: Is a big basket of stocks really more "diversified" than a smaller basket?
Replies: 22
Views: 1576

Re: Is a big basket of stocks really more "diversified" than a smaller basket?

I'very been really tempted to have a small 4th fund in my 401k due to this issue. It is to complete my TSM because my s&p500 index is not true TSM. I hate to disaprove of the boglehead philosophy. From this conversation it seems like a TSM can be s&p500 and that I don't need to complicate things. M...
by alex_686
Wed Oct 25, 2017 10:35 am
Forum: Investing - Theory, News & General
Topic: Is a big basket of stocks really more "diversified" than a smaller basket?
Replies: 22
Views: 1576

Re: Is a big basket of stocks really more "diversified" than a smaller basket?

by alex_686 » Wed Oct 25, 2017 7:14 am To extend this a bit it takes about 20 stocks to capture 80% of the return of the S&P 500. 40 stocks gets you 90%. The benefit of diversification falls as you add more stocks. It does not fall to zero. That is the rationale behind the belief that TSM is the op...
by alex_686
Wed Oct 25, 2017 9:26 am
Forum: Investing - Help with Personal Investments
Topic: end of year distributions
Replies: 3
Views: 338

Re: end of year distributions

Distributions are from accrued income over the year. This accrued income is currently reflected in the NAV. Thus distributions have no economic impact. They are there so the IRS knows what taxes you owe. Since it is in a IRA there is not tax impact. So no impact.
by alex_686
Wed Oct 25, 2017 9:14 am
Forum: Investing - Theory, News & General
Topic: Is a big basket of stocks really more "diversified" than a smaller basket?
Replies: 22
Views: 1576

Re: Is a big basket of stocks really more "diversified" than a smaller basket?

To extend this a bit it takes about 20 stocks to capture 80% of the return of the S&P 500. 40 stocks gets you 90%. The benefit of diversification falls as you add more stocks. It does not fall to zero.
by alex_686
Tue Oct 24, 2017 4:31 pm
Forum: Investing - Help with Personal Investments
Topic: Difference in ERs between Vanguard's Funds vs ETFs
Replies: 13
Views: 845

Re: Difference in ERs between Vanguard's Funds vs ETFs

Why would it be the same? VFSVX is an investor class and the investor class has a higher cost structure. ETFs have a lower expense ratio because they have a lower cost structure. Parts of the back office expenses can be offloaded into the market.